Caesars Reveals a Potential £2.9B William Hill Takeover Bid
Caesars Entertainment, the US casino giant operator, announced Monday that it is in early talks to purchase William Hill, a UK-based sports betting company. Caesars explained it was going to give the bookmaker an official £2.9 billion ($3.7billion) cash takeover offer.
At the end of last week, William Hill responded to reports that it was at the center of a possible bidding battle, reporting that it obtained separate cash bids from Apollo Global Management, Inc. and Caesars Entertainment, Inc., as the appeal of the rising US sports betting industry is forcing casino operators to fight for one piece of it.
Fair Premium On Existing Market Appraisal
Caesars' £2.9 billion cash bid, though unofficial, reflects a 25% increase on all shares relative to Thursday's day-to-day trading closing, offering 272 pence a share. But its share market price jumped 33% after William Hill's announcement on Friday, and closed above Caesars' proposed price per share.
The bookmaker company's board of directors explained the potential bid "is at a price range they will be willing to recommend to shareholders in William Hill," as any attempt to purchase the retailer should be subject to their approval.
Caesars Now Involved With William Hill
Relative to its future competitor, private equity firm Apollo, Caesars has a strategic edge as it owns 20% in a joint sports betting partnership with William Hill in the United States. The sports book operator has gained rights to run through Caesars assets under the provisions of the agreement arrangement in states where sports betting is permitted. If Caesars and William Hill combine, the latter will also obtain access to Caesars' customer loyalty scheme, which consists of 60 million participants by end of 2019.
The casino giant explained that in the event that Apollo acquires William Hill, the terms of the joint venture allow the sports book operator to sever market access rights. Caesars has noted that it is only interested in holding the bookmaker's US holdings and betting technologies, and will look to divest the UK and other markets outside the US, where it focuses on retail operations.
US Sports Betting
After the 2018 supreme court decision approved the legalization of sports betting by other states besides Nevada, 22 states and the district of Columbia have allowed sports betting, and the planned agreement will be the latest in a sequence of business consolidation estimated to expand to $18 billion in revenue by 2025 Caesars is among the top three market share participants as estimated by some analysts, with the other two being the holders of the companies FanDuel and FoxBet, Flutter Entertainment, and DraftKings, a fantasy sports company.
